Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose all the money you invest

• If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.

2. You are unlikely to be protected if something goes wrong

• Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.

• Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.

3. You won’t get your money back quickly

• Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.

• The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.

• If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.

4. Don’t put all your eggs in one basket

• Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.

• A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

5. The value of your investment can be reduced

• The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.

• These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

Your details

Email address Why do we ask for this?

So we can send you a copy of this – and other documents, free guides and research reports – by email for easy reference. We need a unique email address so we can identify you to comply with FCA rules on high risk investments. Read more on how we use the information you provide »

Your address Why do we ask for this?

Only UK residents can be members of Wealth Club and use our services. To check this we ask you to provide a valid postcode and address. Read more on how we use the information you provide »

Postcode

Enter address manually

Select address

Address line 1

Address line 2 (optional)

Address line 3 (optional)

Address line 4 (optional)

Address line 5 (optional)

Town or City

Postcode

I understand the investments offered by Wealth Club are only for high net worth or sophisticated investors and I confirm I am such an investor. I understand I may be asked to confirm this in more detail when I apply.

When you download guides and documents or register for deals, you receive complimentary membership of Wealth Club. Benefits include access to investment guides, research reports, news and alerts on investment opportunities and private offers. If you wish to object to your data being processed or you don't want to activate your free membership, you can do this using the link in the ‘Thank you’ email we send you. Your personal data will remain confidential, and will never be passed to any other company, unless required by law.

Read our full Privacy Notice.

Free factsheet: Pension Money Purchase Annual Allowance

If you have started taking taxable money out of your pension using pension freedoms, the amount you can still contribute to a pension could be reduced to £10,000. This is known as the “Money Purchase Annual Allowance” – MPAA for short.

What might trigger the MPAA? When does it apply or not apply, and what happens if you exceed it? Download the free factsheet to learn more…

Could your pension contributions be restricted by the MPAA?

The “annual allowance” caps the amount you can contribute to a pension in a year – and receive tax relief on – at £60,000 for most people.

However, if you have started taking taxable money out of your pension using pension freedoms, your annual allowance may be reduced to £10,000. This is known as the “Money Purchase Annual Allowance” – MPAA for short.

In this free factsheet:

What might trigger the pension MPAA?
From when does the MPAA apply?
What happens if you exceed it?

Download the free factsheet to find out

IMPORTANT: This factsheet, like the service Wealth Club offers, is for experienced investors: it is not advice or a personal recommendation. The factsheet gives a quick summary of a complex subject and does not cover every nuance. If unsure, seek professional advice.

Pensions are long-term investments: you cannot normally access your funds before age 55 (57 from 2028). Before making any contributions you should check you are eligible.

Tax benefits depend on circumstances. Tax rules can change.

Why not download your free factsheet now?